i1041-n--2021-12-00

Instructions for Form 1041-N

Department of the Treasury
Internal Revenue Service

(Rev. December 2021)

U.S. Income Tax Return for Electing Alaska Native Settlement Trusts
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 1041-N
and its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form1041N.

General Instructions
Use this revision for tax years beginning
after 2017.

Purpose of Form

Under section 646, an Alaska Native
Settlement Trust (ANST) may elect to
apply special income tax treatment to
the trust and its beneficiaries. This
one-time election is made by filing Form
1041-N in the first tax year of the trust.
Form 1041-N is used to report an
ANST's income, deductions, gains,
losses, etc., and to figure and pay any
income tax due. Form 1041-N is also
used to report special information
applicable to an ANST's filing
requirements.

Definitions

An ANST is a settlement trust within the
meaning of section 3(t) of the Alaska
Native Claims Settlement Act (ANCSA).
An Alaska Native Corporation (ANC)
has the same meaning as the term
"Native Corporation" has under section
3(m) of the ANCSA.
A sponsoring ANC means the ANC
that transfers assets to an electing
ANST.
A trustee is a fiduciary of the trust.
Any reference in these instructions to
“you” means the trustee of the trust.

Tax Treatment of an
Electing ANST
Adjusted Gross Income (AGI)

Figure the AGI of an electing ANST by
subtracting from total income (line 5)
administrative costs (lines 7 through 9)
and the exemption amount (line 11).
Administrative costs are deductible to
the extent they would not have been
incurred if the property were not held by
the ANST.
Oct 20, 2021

Taxable Income

In general, an electing ANST's taxable
income is figured in the same manner
as any other taxable trust (see Internal
Revenue Code subchapter J). However,
the electing ANST isn't allowed to take
an income distribution deduction,
though it can claim an exemption
deduction, the amount of which
depends on the terms of the trust.
See the Schedule K instructions for
information on the beneficiaries' tax
treatment of distributions received from
the ANST.

Income Assignment From a
Native Corporation
The ANST reports income
assignments from an ANC on the
appropriate income line consistent with
the type of income assigned to the
ANST. See Part III—Other Information,
Question 1, later, for the information
required to be attached to the form.

Tax

An electing ANST pays tax on its
taxable income at the lowest rate
specified for single individuals (10%). If
the ANST has net capital gain or
qualified dividends, use the tax
computation on Part IV of Schedule D,
which applies a 0% rate on its adjusted
net capital gain.

Disqualifying Acts

If, at any time, a beneficial interest in an
ANST may be disposed of to a person
in a manner that isn't permitted by
section 7(h) of the ANCSA (if the
interest were settlement common
stock), then:
• If no election has previously been
made, the ANST can't elect special tax
treatment under section 646 for the trust
and its beneficiaries; or
• If the election is in effect at that time:
1. The election won't apply as of the
first day of the tax year in which a
prohibited disposition is first allowed;
2. The section 646 tax treatment
won't apply to the trust for that tax year
or in any subsequent tax years; and
3. The distributable net income of
the trust will be increased by the current
or accumulated earnings and profits of
the sponsoring ANC as of the close of
Cat. No. 38105U

the tax year, after adjustment is made
for all distributions made by the
sponsoring ANC during the tax year.
However, this increase is limited to the
fair market value (FMV) of the trust's
assets as of the date the beneficial
interest of the trust first becomes
disposable.
If stock in the sponsoring ANC may
be disposed of to a person in a manner
that isn't allowed by section 7(h) of the
ANCSA (if the stock were settlement
common stock) and at any time after
such disposition of stock is first allowed,
the corporation transfers assets to an
ANST, then items 1, 2, and 3 above will
apply to the ANST in the same manner
as if the ANST allowed dispositions of
beneficial interests in the ANST in a
manner not allowed by section 7(h) of
the ANCSA.
The surrender of an interest in an
ANC or an electing ANST by the
shareholder or beneficiary, for a whole
or partial redemption or for the whole or
partial liquidation of the corporation or
trust, will be considered a transfer
allowed by section 7(h) of the ANCSA.

Information Reporting
Requirements

Electing ANSTs must complete
Schedule K and file it with Form 1041-N.
The ANST must also provide a copy of
Schedule K to the sponsoring ANC by
the date Form 1041-N is required to be
filed with the IRS. The ANST isn't
required to provide information to the
beneficiaries on distributions made to
them. The sponsoring ANC will provide
the beneficiaries with any required
information.

Who Must File

The trustee of any electing ANST
having any taxable income, or having
gross income of at least $600 for the tax
year, must file Form 1041-N for that
year.

Making the Election

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CAUTION

The trustee of an ANST must
make this election by the due
date (including extensions) for

filing the ANST's tax return for its first
tax year.
The trustee makes the election for the
ANST by signing Form 1041-N in the
signature block on page 1. The return
must be filed by the due date (including
extensions) for filing the ANST's tax
return for its first tax year. Once the
election is made, it applies to all
subsequent years and can't be revoked.

When To File

ANSTs file Form 1041-N by the 15th
day of the 4th month following the close
of the tax year. If the due date falls on a
Saturday, Sunday, or legal holiday, file
on the next business day.

Private Delivery Services

You can use certain private delivery
services (PDSs) designated by the IRS
to meet the "timely mailing as timely
filing" rule for tax returns. Go to
IRS.gov/PDS for the current list of
designated services.
The PDS can tell you how to get
written proof of the mailing date.
For the IRS mailing address to use if
you’re using a PDS, go to IRS.gov/
PDSStreetAddresses.
PDSs can't deliver items to P.O.
boxes. You must use the U.S.
CAUTION Postal Service to mail any item
to an IRS P.O. box address.

!

Extension of Time To File

Use Form 7004, Application for
Automatic Extension of Time To File
Certain Business Income Tax,
Information, and Other Returns, to
request an automatic extension of time
to file.
An extension of time to file doesn't
extend the time to pay the tax.

Where To File

File Form 1041-N at the following
address.
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0027

Who Must Sign

The trustee or an authorized
representative must sign Form 1041-N.

Paid Preparer

Generally, anyone who is paid to
prepare a tax return must sign the return
and provide the information requested
in the Paid Preparer Use Only area of

the return. The person required to sign
the return must:
• Complete the required preparer
information;
• Sign it in the space provided for the
preparer's signature; and
• Give you a copy of the return for your
records, in addition to the copy to be
filed with the IRS.

Paid Preparer Authorization

If the trustee wants to allow the IRS to
discuss the ANST's tax return with the
paid preparer who signed it, check the
“Yes” box in the signature area of the
return. This authorization applies only to
the individual whose signature appears
in the Paid Preparer Use Only section of
the ANST's return. It doesn't apply to the
firm, if any, shown in that section.
If the “Yes” box is checked, the
trustee is authorizing the IRS to call the
paid preparer to answer any questions
that may arise during the processing of
the ANST's return. The trustee is also
authorizing the paid preparer to:
• Give the IRS any information that is
missing from the ANST's return;
• Call the IRS for information about the
processing of the ANST's return or the
status of its refund or payment(s); and
• Respond to certain IRS notices that
the trustee has shared with the preparer
about math errors, offsets, and return
preparation. The notices won't be sent
to the preparer.
The trustee isn't authorizing the paid
preparer to receive any refund, enter
into any agreement (including those
regarding additional tax liability), or
otherwise represent the ANST before
the IRS. If the trustee wants to expand
the paid preparer's authorization, see
Pub. 947, Practice Before the IRS and
Power of Attorney.

consent on Form 3115, Application for
Change in Accounting Method. For
more information, see Pub. 538,
Accounting Periods and Methods.

Accounting Periods

All electing ANSTs must adopt a
calendar year.

Rounding Off to Whole
Dollars

You may round off cents to whole
dollars on the ANST's return and
schedules. If you do round to whole
dollars, you must round all amounts. To
round, drop amounts under 50 cents
and increase amounts from 50 to 99
cents to the next dollar. For example,
$1.39 becomes $1 and $2.50
becomes $3.
If you have to add two or more
amounts to figure the amount to enter
on a line, include cents when adding the
amounts and round off only the total.

Estimated Tax

Generally, an ANST must pay estimated
income tax if it expects to owe at least
$1,000 after subtracting withholding and
credits. For details and exceptions, see
Form 1041-ES, Estimated Income Tax
for Estates and Trusts.

Interest and Penalties
Interest

Interest is charged on taxes not paid by
the due date, even if an extension of
time to file is granted. Interest is also
charged on the failure-to-file penalty, the
accuracy-related penalty, and the fraud
penalty. The interest charge is figured at
a rate determined under section 6621.

Late Filing of Return

Figure taxable income using the method
of accounting regularly used in keeping
the ANST's books and records.
Generally, permissible methods include
the cash method, the accrual method,
or any other method authorized by the
Internal Revenue Code. In all cases, the
method used must clearly reflect
income.

The law provides a penalty of 5% of the
tax due for each month, or part of a
month, that the return isn’t filed up to a
maximum of 25% of the tax due. If the
return is more than 60 days late, the
minimum penalty is the smaller of $435
or the tax due. The penalty won’t be
imposed if you can show that the failure
to file on time is due to reasonable
cause. If you receive a notice about
penalty and interest after you file this
return, send us an explanation, and we
will determine if you meet
reasonable-cause criteria. Don’t attach
an explanation when you file Form
1041-N.

Generally, the ANST may change its
accounting method (overall method or
for any material item) only by getting

For more information about penalties
for late filing, see Late Filing of Return in
the Instructions for Form 1041.

The authorization can't be revoked.
However, the authorization will
automatically end no later than the due
date (regardless of extensions) for filing
the ANST's next tax return.

Accounting Methods

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Instructions for Form 1041-N (Rev. 12-2021)

Late Payment of Tax

Line 3b—Address

Section 6651 also provides for penalties
for late payment. Generally, the penalty
for not paying the tax when due is 1/2 of
1% of the unpaid amount for each
month or part of a month it remains
unpaid. The maximum penalty is 25% of
the unpaid amount. The penalty is
imposed on the net amount due. Any
penalty is in addition to interest charges
on late payments.

Include the suite, room, or other unit
number after the street address. If the
Post Office doesn't deliver mail to the
street address and you have a P.O. box,
show the box number instead of the
street address.

If you include interest or either
of these penalties with your
CAUTION payment, identify and enter
these amounts in the bottom margin of
Form 1041-N. Don’t include the interest
or penalty amount in the balance of tax
due on line 18.

If a different address from the prior
year was entered and Form 8822-B
wasn't filed, check the box on line 6 for
“Change in fiduciary's address.”

!

Underpaid Estimated Tax

If the trustee underpaid estimated tax,
use Form 2210, Underpayment of
Estimated Tax by Individuals, Estates,
and Trusts, to figure any penalty due.
Enter the amount of the penalty in the
bottom margin of Form 1041-N. Don’t
include it in the balance of tax due on
line 18.

Other Penalties

Other penalties can be imposed for
negligence, substantial understatement
of tax, and fraud. See Pub. 17, Your
Federal Income Tax, for details on these
penalties.

Specific Instructions
Enter the year (or period) for which you
are filing for the electing ANST.

Part I—General
Information
Line 1—Name of Trust

Enter the exact name that was used to
apply for the employer identification
number (EIN) for the trust to file Form
1041-N.

Line 3a—Name and Title of
Trustee

Enter the name and title (if any) of the
trustee. If a fiduciary relationship was
created or terminated, file Form 56,
Notice Concerning Fiduciary
Relationship.
If a fiduciary relationship wasn't
created or terminated but the fiduciary
had a change in name or another
fiduciary's name was entered, check the
“Change in fiduciary's name” box on
line 6.

If you change your address after filing
Form 1041-N, use Form 8822-B,
Change of Address or Responsible
Party—Business, to notify the IRS.

Line 6

Be sure to check all the boxes that
apply. Also, see the line 3a and line 3b
instructions above for information
regarding a change in the fiduciary's
name and for information on changes to
the fiduciary's address.

Part II—Tax Computation

Line 3—Capital Gain or (Loss)
Enter the gain from Schedule D, line 11,
or the loss from Schedule D,
line 12.
Note. Report capital gain distributions
on Schedule D (Form 1041-N), line 7.

Line 4—Other Income

Income
Line 2a—Total Ordinary Dividends
Report the total of all ordinary dividends
received during the tax year.

Line 2b—Qualified Dividends
Enter the ANST's total qualified
dividends on line 2b and use Part IV of
Schedule D to figure the ANST's tax.
Qualified dividends are eligible for a
lower tax rate than other ordinary
income. Generally, these dividends are
shown in box 1b of Form(s) 1099-DIV,
Dividends and Distributions. See Pub.
550, Investment Income and Expenses,
for the definition of qualified dividends if
you received dividends not reported on
Form 1099-DIV.
Exceptions. Some dividends may be
reported as qualified dividends in
box 1b of Form 1099-DIV but aren't
qualified dividends. These include the
following.
• Dividends received on any share of
stock that the ANST held for less than
61 days during the 121-day period that
began 60 days before the ex-dividend
date. The ex-dividend date is the first
date following the declaration of a
dividend on which the purchaser of a
stock isn't entitled to receive the next
dividend payment. When counting the
number of days the ANST held the
stock, include the day you disposed of
the stock but not the day you acquired it.
• Dividends attributable to periods
totaling more than 366 days that the
ANST received on any share of

Instructions for Form 1041-N (Rev. 12-2021)

preferred stock held for less than 91
days during the 181-day period that
began 90 days before the ex-dividend
date. Preferred dividends attributable to
periods totaling less than 367 days are
subject to the 61-day holding period rule
above.
• Dividends on any share of stock to
the extent that the ANST is under an
obligation (including a short sale) to
make related payments with respect to
positions in substantially similar or
related property.
• Payments in lieu of dividends, but
only if you know or have reason to know
that the payments aren't qualified
dividends.

-3-

List the type and amount of income not
included on lines 1a through 3. List the
types and amounts on an attached
schedule if the ANST has more than
one item of other income.
Include on line 4 taxable
contributions received from an ANC.
See also Part III—Other Information,
Question 1, later, for additional
information that may need to be
attached to the return. Include on this
line income recognized on the early
disposition of noncash property for
which the ANST previously made a
section 247(g) election. See also Part
III—Other Information, Question 1, later,
for additional information that may need
to be attached to the return. Include on
this line the ordinary income recognized
on the disposition of property for which
the ANST made a section 247(g)
election. Report on Schedule D (Form
1041-N) the capital gain recognized on
such disposition. See Section 247(g)
Election Property in the Instructions for
Schedule D (Form 1041-N) for
additional information.
If the ANST is reporting global
intangible low-taxed income (GILTI),
include it on the attached statement.
Complete and attach Form 8992.

Deductions
Allocation of Deductions for
Tax-Exempt Income
Generally, no deduction is allowed for
any expense that is allocable to
tax-exempt income, such as interest on
state or local bonds.
Exceptions. State income taxes and
business expenses that are allocable to
tax-exempt interest are deductible.
Expenses that are directly allocable
to tax-exempt income are allocable only
to tax-exempt income. A reasonable
proportion of expenses indirectly
allocable to both tax-exempt income
and other income must be allocated to
each class of income.

Limitations on Deductions
Generally, the amount an ANST has
"at-risk" limits the loss it can deduct in
any tax year. Also, section 469 and its
regulations generally limit losses from
passive activities to the amount of
income derived from all passive
activities. Similarly, credits from passive
activities are generally limited to the tax
attributable to such activities.
For details on these and other
limitations on deductions, see
Deductions in the Instructions for Form
1041.
Miscellaneous itemized deductions
subject to the 2% floor will not be
allowed for tax years 2018 through
2025.

Line 9—Other Deductions
Attach a schedule listing by type and
amount all allowable deductions that
aren't deductible elsewhere on the form.
No deduction is allowed for distributions
to beneficiaries.
An ANST may elect under section
965(n) to determine the amount of the
net operating loss (NOL) for a tax year
determined under section 172 and the
amount of taxable income to be reduced
by NOL carryovers or carrybacks to
such tax year without regard to certain
amounts under section 172. The
amount not taken into consideration (the
reduction amount) is generally equal to
the amount of the section 965(a)
inclusion (net of the section 965(c)
deduction). If, as a result of an election
under section 965(n), the amount of the
NOL for the tax year is adjusted, the
reduction amount is included in other
income on line 4. If, as a result of an
election under section 965(n), the

taxable income reduced by NOL
carryovers or carrybacks is reduced, the
NOL deduction on line 4 is reduced by
the reduction amount. See section
965(n) and the regulations thereunder
for more information.
In determining whether an expense is
deductible it must be determined
whether the expense would be
"commonly or customarily" incurred by a
hypothetical individual owning the same
property. A cost incurred by an ANST is
an allowable deduction to the extent that
it is excluded from the definition of
miscellaneous itemized deductions
under section 67(b) and commonly or
customarily would not be incurred by a
hypothetical individual holding the same
property.
Include on line 9 the deduction for
qualified business income. For
information on how to figure the trust's
deduction for qualified business income,
see Form 8995, Qualified Business
Income Deduction Simplified
Computation, and Form 8995-A,
Qualified Business Income Deduction.

Line 10—Reserved for Future Use
Don’t enter any information on line 10.

Line 11—Exemption
A trust whose governing instrument
requires all income to be distributed
currently is allowed a $300 exemption,
even if it distributed amounts other than
income during the tax year. All other
trusts are allowed a $100 exemption.

Tax and Payments
Line 14—Tax
If the ANST doesn't have a net capital
gain or qualified dividends and has an
amount greater than zero on line 13,
check the first box on line 14, multiply
the amount on line 13 by 10% (0.10),
and enter the result on line 14.
Schedule D. If the ANST had a net
capital gain (or qualified dividends) and
any taxable income, complete Part IV of
Schedule D (Form 1041-N), enter the
tax (or -0-, if applicable) from line 28 of
Schedule D on line 14, and check the
“Schedule D” box.

Line 15—Credits
Specify the type of credit being claimed
or form number and attach any required
credit forms. If you are claiming more
than one type of credit, attach a
schedule listing the type and amount of
each credit claimed. See the
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Instructions for Form 1041 for details on
the credits that may be claimed.

Line 17—Reserved for Future Use
Don’t enter any information on line 17.

Line 18—Total Tax
If the ANST owes any additional taxes
(for example, recapture taxes), include
these taxes on line 18. To the left of the
entry space, enter the type and amount
of the tax. Also attach to Form 1041-N
any forms required to figure these taxes.
See the Instructions for Form 1041 for
more details on additional taxes that
may apply.
If the ANST shows more than one
type of additional tax on this line, attach
a schedule showing the type and
amount of each tax, and include the
total of all additional taxes on this line.
Report on this line of an amended
return the additional 10% tax for the
year in which the ANST received a
contribution of noncash property from
an ANC, elected to defer the recognition
of income under section 247(g), but
disposed of the property within the first
tax year subsequent to the tax year the
ANST received the property. The
increase in tax due to the inclusion of
the deferred income, which is the base
amount for the computation of the
additional 10% tax shown on this line,
should be included on line 14. If the
amended return also shows changes to
income, deductions, or credits unrelated
to the inclusion of the deferred income,
attach a schedule showing the
computation of the additional tax due
only to the inclusion of the deferred
income. See also Part III—Other
Information, Question 1, later, for the
statement to be attached to the
amended return.

Line 19—Current Year Net 965 Tax
Liability Paid
If the ANST made a payment with
respect to a current year net 965 tax
liability resulting from an S-corporation
triggering event, enter on line 19 the
amount of the payment reported on
Form 965-A, Part II, column (k), for the
current year.

Line 20—Payments
Include on line 20 any:
• Estimated tax payments made for the
tax year;
• Tax paid with a request for an
extension of time to file;

Instructions for Form 1041-N (Rev. 12-2021)

• Federal income tax withheld (for
example, backup withholding);
• Payment made in the current year
with respect to a net 965 tax liability;
and
• Credit for tax paid on undistributed
capital gains. Attach Copy B of Form
2439, Notice to Shareholder of
Undistributed Long-Term Capital Gains.
Line 21—Tax Due
You must pay the tax in full when the
return is filed to avoid interest charges
and possible penalties. Make the check
or money order payable to “United
States Treasury.” Write the EIN, the tax
year, and “Form 1041-N” on the
payment. Enclose, but don't attach, the
payment with Form 1041-N.

Part III—Other Information
Question 1

If you answer “Yes” to this question,
attach the following information, as
necessary.
Assignment of income under section
139G. Attach a copy of the written
assignment received from the ANC. See
Income Assignment From a Native
Corporation, earlier, for how to report
the assigned income.
Property for which the ANC made an
election under section 247(e). Attach
the statement required under section
6039H(e) received from the ANC. If the
ANST elects under section 247(g) to
defer recognition of income related to
any noncash property received from the
ANC, clearly identify on the statement
for which noncash property the ANST is
making the election and describe the
property (if the statement from the ANC
does not describe it). Include in other
income (line 4) the amount of income
otherwise required to be recognized by
the ANST.
All other property. Attach a
description of the property, the date the
ANST received the property, and the
FMV of the property on that date.
Revocation of prior section 247(g)
election by the ANST. Attach a copy
of the statement attached to the return
on which the ANST made the election.
Clearly identify on the statement the
noncash property for which the ANST is
revoking the prior election. For noncash
property for which the ANST is revoking
the prior election, include on the
appropriate line of the amended return
(and attach any required supporting
schedules) the additional income the
ANST recognized as a result of revoking

the election. For each property for which
the ANST both revokes the election and
does not recognize additional income,
attach a statement that identifies such
property and the reason for not
recognizing additional income.
Early disposition of property for
which the ANST made a section
247(g) election. An early disposition of
property for which the ANST made a
section 247(g) election is a disposition
that occurs during the first tax year
subsequent to the tax year in which
such property was contributed to the
ANST. Attach a copy of the statement
attached to the return on which the
ANST made the election. Clearly
identify on the statement the noncash
property the ANST sold or exchanged
during the tax year. For each early
disposition of noncash property, include
on the appropriate line of the amended
return (and attach any required
supporting schedules) the additional
income the ANST recognized. For each
property sold or exchanged for which
the ANST does not recognize additional
income, attach a statement that
identifies such property and the reason
for not recognizing additional income.
See also the instructions for line 18 for
how to report the additional tax due on
the sale or exchange of the asset.

Question 2

The ANST may be required to file Form
3520, Annual Return To Report
Transactions With Foreign Trusts and
Receipt of Certain Foreign Gifts, if any
of the following apply.
• It directly or indirectly transferred
property or money to a foreign trust. For
this purpose, any U.S. person who
created a foreign trust is considered a
transferor.
• It is treated as the owner of any part
of the assets of a foreign trust under the
grantor trust rules.
• It received a distribution from a
foreign trust.
Note. An owner of a foreign trust must
ensure that the trust files Form 3520-A,
Annual Information Return of Foreign
Trust With a U.S. Owner.

Question 3

Check the “Yes” box and enter the
name of the foreign country if either (1)
or (2) below applies.
1. The ANST owns more than 50%
of the stock in any corporation that owns
one or more foreign bank accounts.
2. At any time during the year, the
ANST had an interest in or signature or
other authority over a bank, securities,

Instructions for Form 1041-N (Rev. 12-2021)

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or other financial account in a foreign
country.
Exception. Check “No” if either of the
following applies to the ANST.
• The combined value of the accounts
was $10,000 or less during the whole
year.
• The accounts were with a U.S.
military banking facility operated by a
U.S. financial institution.
Refer to FinCEN Form 114, Report of
Foreign Bank and Financial Accounts
(FBAR), to see if the ANST is
considered to have an interest in or
signature or other authority over a bank,
securities, or other financial account in a
foreign country.
If you checked “Yes” for Question 3,
electronically file FinCEN Form 114 with
the Department of the Treasury using
FinCEN's BSA E-Filing System.
Because FinCEN Form 114 isn't a tax
form, don't file it with Form 1041-N.
Go to www.FINCEN.gov for more
information.
If you are required to file
FinCEN Form 114 but don't, you
CAUTION may have to pay a penalty of up
to $10,000 (or more in some cases).

!

Question 4

For tax years beginning after December
31, 2015, a domestic trust, including an
ANST, that is formed or availed of to
hold specified foreign financial assets
("a specified domestic entity") must file
Form 8938 with its Form 1041-N for the
tax year. Form 8938 must be filed each
year the value of the trust's specified
foreign financial assets equals or
exceeds the reporting threshold. For
more information on domestic trusts that
are specified domestic entities and the
types of foreign financial assets that
must be reported, see the Instructions
for Form 8938, generally, and in
particular, Who Must File, Specified
Domestic Entity, Reporting Thresholds,
Specified Foreign Financial Assets,
Interests in Specified Foreign Financial
Assets, Assets Not Required To Be
Reported, and Exceptions to Reporting.
An ANST required to file Form 8938
with its Form 1041-N for the tax year
should check "Yes" to Question 4 of
Part III of Form 1041-N.

Question 5

To make the section 643(e)(3) election
to recognize gain on property distributed
in kind, check the box and complete
Schedule D. For more information, see
Section 643(e)(3) Election, later.

Schedule D—Capital
Gains and Losses
General Instructions
Purpose of Schedule
Use Schedule D to report gains and
losses from the sale or exchange of
capital assets by an ANST.
Details of each transaction must be
reported on this schedule. If there are
more transactions than spaces on line 1
or 5, you can report the transactions on
an attached statement containing all the
same information as Schedule D using
a similar format. Enter on Schedule D,
lines 1 and 5, as appropriate, the totals
from all attached statements for lines 1
and 5.

Other Forms You May Have To File
Use Form 461, Limitation on Business
Losses, to report the excess business
loss that is reported on your
noncorporate tax return.
Use Form 965-A, Individual Report of
Net 965 Tax Liability, to report the net
965 tax liability.
Use Form 4797, Sales of Business
Property, to report the following.
• The sale or exchange of property
used in a trade or business.
• The sale or exchange of depreciable
and amortizable property.
• The involuntary conversion (other
than from casualty or theft) of property
and capital assets held for business or
profit.
• The disposition of noncapital assets
other than inventory or property held
primarily for sale to customers in the
ordinary course of trade or business.
Use Form 4684, Casualties and
Thefts, to report involuntary conversions
of property due to casualty or theft.
Use Form 6781, Gains and Losses
From Section 1256 Contracts and
Straddles, to report gains and losses
from section 1256 contracts and
straddles.
Use Form 8824, Like-Kind
Exchanges, if the ANST made one or
more like-kind exchanges. A like-kind
exchange occurs when the ANST
exchanges business or investment
property for property of a like kind.

Use Form 8992, U.S. Shareholder
Calculation of Global Intangible
Low-Taxed Income (GILTI), to report the
ANST’s GILTI.

You may find additional helpful
information in Pub. 544, Sales and
Other Dispositions of Assets, and Pub.
551, Basis of Assets.

Use Form 8995, Qualified Business
Income Deduction Simplified
Computation, and Form 8995-A,
Qualified Business Income Deduction,
to figure the qualified business income
deduction.

Section 247(g) Election Property

Capital Asset
Each item of property held by the ANST
is a capital asset, except for the
following.
• Stock in trade, inventory, or property
held primarily for sale to customers.
• Depreciable or real property used in a
trade or business.
• Certain patents, inventions, models,
or designs (whether or not patented);
secret formulas or processes; or similar
property (see section 1221(a)(3)).
• Copyrights; literary, musical, or
artistic compositions; letters or
memoranda; or similar property eligible
for copyright protection that the trust
received from someone whose personal
efforts created them or for whom they
were created in a way (such as by gift)
that entitled the trust to the basis of the
previous owner (in the case of letters,
memoranda, or similar property, such
property may also be prepared or
produced for the trust).
Note. Pursuant to section 1221(b)(3),
the trust can elect to treat musical
compositions and copyrights in musical
works as capital assets if it sold or
exchanged them in a tax year beginning
after May 17, 2006, and acquired the
assets under circumstances entitling it
to the basis of the person who created
the property or for whom it was
prepared or produced.
• Accounts or notes receivable
acquired in the ordinary course of a
trade or business for services rendered
or from the sale of inventoriable assets
or property held primarily for sale to
customers.
• Certain U.S. Government
publications not purchased at the public
sale price.
• Certain "commodities derivative
financial instruments" held by a dealer
(see section 1221(a)(6)).
• Certain hedging transactions entered
into in the normal course of the ANST's
trade or business (see section 1221(a)
(7)).
• Supplies regularly used in the ANST's
trade or business.

Use Form 8938, Statement of
Specified Foreign Financial Assets.
-6-

Early disposition of section 247(g)
property. An early disposition of
property for which the ANST made a
section 247(g) election is a disposition
that occurs during the first tax year
subsequent to the tax year in which
such property was contributed to the
ANST. The ANST must amend the tax
return for the year in which the ANST
received the contributed property to
report on line 4 the amount of income
that would have been included in that
year but for the election.
Other dispositions of section 247(g)
property. Report on line 4 the amount
of income deferred as a result of making
the section 247(g) election. Also report
any additional gain or loss on the
disposition of property as if there were
no section 247(g) election, following
these Schedule D instructions.
Note. Section 267 doesn't allow an
ANST to claim a loss on the disposition
of property to a related party. In
addition, when an ANST disposes of
depreciable property to a related party,
section 1239 applies to deny capital
gains treatment for any gain.

Short-Term or Long-Term
Separate the capital gains and losses
according to how long the ANST held or
owned the property. The holding period
for short-term capital gains and losses is
1 year or less. The holding period for
long-term gains and losses is more than
1 year.
To figure the length of the period the
ANST held property, begin counting on
the day after the ANST acquired the
property and include the day the ANST
disposed of it. Use the trade dates for
the date of acquisition and sale of
stocks and bonds traded on an
exchange or over-the-counter market.
For property received by the ANST
from an ANC for which the ANC made
an election under section 247(e)(1), the
ANST's holding period includes the
period the ANC held the property.

Section 643(e)(3) Election
For in-kind noncash property
distributions, a fiduciary may elect to
have the ANST recognize gain or loss in
the same manner as if the distributed

Capital Loss Carryover Worksheet

Keep for Your Records

Use this worksheet to figure the ANST's capital loss carryovers from the current tax year to the following tax year if Schedule D, line 12, is a loss and (a) the
loss on Schedule D, line 11, is more than $3,000; or (b) Form 1041-N, page 1, line 13, is a loss.
1. Enter taxable income (or loss) from Form 1041-N, line 13

................................................

1.

2. Enter loss from Schedule D, line 12, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Enter amount from Form 1041-N, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Adjusted taxable income. Combine lines 1, 2, and 3. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5. Enter the smaller of line 2 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

Note. If line 4 of Schedule D is a loss, go to line 6; otherwise, enter -0- on line 6 and go to line 10.
6. Enter loss from Schedule D, line 4, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Enter gain, if any, from Schedule D, line 10. If that line is blank or shows a loss, enter -0- . . . . . . . .
8. Add lines 5 and 7

6.

7.

............................................................................

8.

9. Short-term capital loss carryover. Subtract line 8 from line 6. If zero or less, enter -0-. Enter this loss on the short-term
capital loss carryover line of next year's Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

Note. If line 10 of Schedule D is a loss, go to line 10; otherwise, skip lines 10 through 14.
10. Enter loss from Schedule D, line 10, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Enter gain, if any, from Schedule D, line 4. If that line is blank or shows a loss, enter -012. Subtract line 6 from line 5. If zero or less, enter -0-

........

11.

..................................

12.

10.

13. Add lines 11 and 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.

14. Long-term capital loss carryover. Subtract line 13 from line 10. If zero or less, enter -0-. Enter this loss on the long-term
capital loss carryover line of next year's Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.

property had been sold to the
beneficiary at its FMV. If the election is
made, the beneficiary's basis of such
property is its FMV. This election
applies to all distributions made by the
ANST during the tax year and, once
made, may be revoked only with IRS
consent.
Note. Section 267 doesn't allow an
ANST to claim a deduction for any loss
on property to which a section 643(e)(3)
election applies. In addition, when an
ANST distributes depreciable property,
section 1239 applies to deny capital
gains treatment for any gain on property
to which a section 643(e)(3) election
applies.
For more information on making the
section 643(e)(3) election, see Part
III—Other Information, Question 5,
earlier.

Column (d)—Sales Price
Enter either the gross sales price or the
net sales price from the sale. On sales
of stocks and bonds, report the gross
amount as reported to the ANST on
Form 1099-B, Proceeds From Broker
and Barter Exchange Transactions, or
similar statement. However, if the ANST
was advised that gross proceeds less
commissions and option premiums
were reported to the IRS, enter only the
net amount in column (d).

Column (e)—Cost or Other Basis
Generally, the basis of property
acquired by gift is the same as its basis
in the hands of the donor. However, if
the FMV of the property at the time it
was transferred to the trust is less than
the transferor's basis, then the FMV is
used for determining any loss on
disposition.
For property received by the ANST
from an ANC for which the ANC made
an election under section 247(e)(1), the
ANST's basis in the property is the
lesser of the adjusted basis of the ANC
in the property immediately before the
contribution, or the FMV of the property
immediately before the contribution.
If the property was transferred to the
ANST and a gift tax was paid under
chapter 12, then increase the donor's
basis as follows: multiply the amount of
the gift tax paid by a fraction, the
numerator of which is the net
appreciation in value of the gift (defined
below), and the denominator of which is
the amount of the gift. For this purpose,
the net appreciation in value of the gift is
the amount by which the FMV of the gift
exceeds the donor's adjusted basis.
Then, add the result to the donor's
basis.
Adjustments to basis. Before figuring
any gain or loss on the sale, exchange,
or other disposition of property owned
by the ANST, adjustments to the

Instructions for Form 1041-N (Rev. 12-2021)

-7-

property's basis may be required. See
Pub. 551 for additional information.

Column (f)—Gain or (Loss)
Make a separate entry in this column for
each transaction reported on lines 1 and
5 and any other lines that apply to the
ANST. For lines 1 and 5, subtract the
amount in column (e) from the amount
in column (d). Enter negative amounts in
parentheses.

Line 23
Add line 18 from the Unrecaptured
Section 1250 Gain Worksheet and line 7
from the 28% Rate Gain Worksheet.
Exclusion of gain on qualified small
business (QSB) stock. Section 1202
allows you to exclude a portion of the
eligible gain on the sale or exchange of
certain QSB stock.
How to report. Report on line 5 of
Schedule D the gain realized on the sale
of QSB stock. Complete all columns as
indicated. Directly below the line on
which you report the gain, enter in
column (a) “Section 1202 exclusion”
and enter as a loss in column (f) the
amount of allowable exclusion. If you
are completing line 23 of Schedule D,
enter as a positive number the amount
of your allowable exclusion on line 2 of
the 28% Rate Gain Worksheet; if you
excluded 60% of the gain, enter 2/3 of
the exclusion; if you excluded 75% of

Unrecaptured Section 1250 Gain Worksheet

Keep for Your Records

If the ANST isn't reporting a gain on Form 4797, Sales of Business Property, line 7 (for 2021, or the comparable line for the current tax year),
skip lines 1 through 9 and go to line 10.
1. If the ANST has section 1250 property in Part III of Form 4797 for which you made an entry in Part I of Form 4797 (but not on
Form 6252, Installment Sale Income), enter the smaller of line 22 or line 24 of Form 4797 (for 2021, or the comparable line for
the current tax year) for that property. If the ANST did not have any such property, go to line 4. If it had more than one such
property, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2. Enter the amount from Form 4797, line 26g (for 2021, or the comparable line for the current tax year), for the property for which
you made an entry on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 (for 2021, or the comparable line
4.
for the current tax year) from installment sales of trade or business property held more than 1 year. See instructions . . . . . . .
5. Enter the total of any amounts reported to the ANST on a Schedule K-1 from a partnership or an S corporation as
5.
“unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7. Enter the smaller of line 6 or the gain from Form 4797, line 7 (for 2021, or the comparable line for
7.
the current tax year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Enter the amount, if any, from Form 4797, line 8 (for 2021, or the comparable line for the current tax
8.
year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to unrecaptured section 1250
10.
gain. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Enter the total of any amounts reported to the ANST on a Schedule K-1, Form 1099-DIV, or Form 2439 as "unrecaptured
section 1250 gain" from an estate, trust, real estate investment trust, or mutual fund (or other regulated investment
company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.
12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other dispositions of section
1250 property held more than 1 year for which you did not make an entry in Part I of Form 4797 for the year of sale. See
instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.
13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.
14. If the ANST had any section 1202 gain or collectibles gain or (loss), enter the total of lines 1
through 4 of the 28% Rate Gain Worksheet. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . .
14.
15. Enter the (loss), if any, from Schedule D, line 4. If Schedule D, line 4, is zero or a gain,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.
16. Enter the ANST's long-term capital loss carryover from Schedule D, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
)
16. (
17. Combine lines 14 through 16. If the result is zero or a gain, enter -0-. If the result is a (loss), enter it as a positive
amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17.
18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. Combine this result with the result on
line 7 of the 28% Rate Gain Worksheet, if any, and enter that result on Schedule D, line 23 . . . . . . . . . . . . . . . . . . . . . . . . .
18.

the gain, enter 1/3 of the exclusion. Don’t
make an entry for any section 1202
exclusion that is 100% of the gain.
For more information about QSB
stock, see the Instructions for
Schedule D (Form 1041).

Unrecaptured Section 1250 Gain
Complete the Unrecaptured Section
1250 Gain Worksheet if any of the
following apply.
• During the tax year, the ANST sold or
otherwise disposed of section 1250
property (generally, real property that
was depreciated) held more than 1 year.
• The ANST received installment
payments during the tax year for section
1250 property held more than 1 year for
which it is reporting gain on the
installment method.
• The ANST received a Schedule K-1
from an estate or trust, partnership, or S
corporation that shows "unrecaptured
section 1250 gain" reportable for the tax
year.
• The ANST received a Form 1099-DIV
or Form 2439 from a real estate
investment trust or regulated investment
company (including a mutual fund) that
reports "unrecaptured section 1250
gain" for the tax year.

• The ANST reported a long-term
capital gain from the sale or exchange
of an interest in a partnership that
owned section 1250 property.
Instructions for the Unrecaptured
Section 1250 Gain Worksheet
Lines 1 through 3. If the ANST had
more than one property described on
line 1, complete lines 1 through 3 for
each property on a separate worksheet.
Enter the total of the line 3 amounts for
all properties on line 3 and go to line 4.
Line 4. To figure the amount to enter
on line 4, follow the steps below for
each installment sale of trade or
business property held more than 1
year.
Step 1. Figure the smaller of (a) the
depreciation allowed or allowable, or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of the 2021
Form 4797 (or the comparable lines of
Form 4797 for the year of sale) for that
property.
Step 2. Reduce the amount figured
in Step 1 by any section 1250 ordinary
income recapture for the sale. This is
the amount from line 26g of the 2021
-8-

Form 4797 (or the comparable line of
Form 4797 for the year of sale) for that
property. The result is the total
unrecaptured section 1250 gain that
must be allocated to the installment
payments received from the sale.
Step 3. Generally, the amount of
section 1231 gain on each installment
payment is treated as unrecaptured
section 1250 gain until the total
unrecaptured section 1250 gain figured
in Step 2 has been used in full. Figure
the amount of gain treated as
unrecaptured section 1250 gain for
installment payments received during
the tax year as the smaller of (a) the
amount from line 26 or line 37 of the
2021 Form 6252 (or comparable lines
for the current tax year), whichever
applies; or (b) the amount of
unrecaptured section 1250 gain
remaining to be reported. This amount
is generally the total unrecaptured
section 1250 gain for the sale reduced
by all gain reported in prior years
(excluding section 1250 ordinary
income recapture). However, if you
chose not to treat all of the gain from
payments received after May 6, 1997,
and before August 24, 1999, as
unrecaptured section 1250 gain, use

Instructions for Form 1041-N (Rev. 12-2021)

28% Rate Gain Worksheet

Keep for Your Records

1. Enter the total of all collectibles gain or (loss) from items reported on Schedule D, line 5, column (f)

...................

1.

2. Enter any of the following as a positive number.
• Any section 1202 exclusion reported on Schedule D, line 5, column (f), that is 50% of the gain.
• 2/3 of any section 1202 exclusion reported on Schedule D, line 5, column (f), that is 60% of the gain.
• 1/3 of any section 1202 exclusion reported on Schedule D, line 5, column (f), that is 75% of the gain.
Don’t make an entry for any section 1202 exclusion that is 100% of the gain.
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Enter the total of all collectibles gain or (loss) from items reported on Schedule D, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Enter the total of all collectibles gain from capital gain distributions reported on Schedule D, line 7 . . . . . . . . . . . . . . . . . . . .

4.

5. Enter the long-term capital loss carryover from Schedule D, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. (

6. If Schedule D, line 4, is a (loss), enter that (loss) here. Otherwise, enter -0-

....................................

6.

7. Combine lines 1 through 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

only the amount you chose to treat as
unrecaptured section 1250 gain for
those payments to reduce the total
unrecaptured section 1250 gain
remaining to be reported for the sale.
Include this amount on line 4.

Form 4797 (or the comparable line of
Form 4797 for the year of sale) for that
property. The result is the total
unrecaptured section 1250 gain that
must be allocated to the installment
payments received from the sale.

Line 10. Include on line 10 the ANST's
share of the partnership's unrecaptured
section 1250 gain that would result if the
partnership had transferred all of its
section 1250 property in a fully taxable
transaction immediately before the
ANST sold or exchanged its interest in
that partnership. If the ANST recognized
less than all of the realized gain, the
partnership will be treated as having
transferred only a proportionate amount
of each section 1250 property.

Step 3. Generally, the amount of
capital gain on each installment
payment is treated as unrecaptured
section 1250 gain until the total
unrecaptured section 1250 gain figured
in Step 2 has been used in full. Figure
the amount of gain treated as
unrecaptured section 1250 gain for
installment payments received during
the tax year as the smaller of (a) the
amount from line 26 or line 37 of the
2021 Form 6252 (or comparable lines
for the current tax year), whichever
applies; or (b) the amount of
unrecaptured section 1250 gain
remaining to be reported. This amount
is generally the total unrecaptured
section 1250 gain for the sale reduced
by all gain reported in prior years
(excluding section 1250 ordinary
income recapture). However, if you
chose not to treat all of the gain from
payments received after May 6, 1997,
and before August 24, 1999, as
unrecaptured section 1250 gain, use
only the amount you chose to treat as
unrecaptured section 1250 gain for
those payments to reduce the total
unrecaptured section 1250 gain
remaining to be reported for the sale.
Include this amount on line 12.

Line 12. An example of an amount to
include on line 12 is unrecaptured
section 1250 gain from the sale of a
vacation home previously used as a
rental property but converted to
personal use prior to the sale.
Installment sales. To figure the
amount to include on line 12, follow the
steps below for each installment sale of
property held more than 1 year for which
you didn’t make an entry in Part I of
Form 4797 for the year of sale.
Step 1. Figure the smaller of (a) the
depreciation allowed or allowable, or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of the 2021
Form 4797 (or comparable lines of Form
4797 for the year of sale) for that
property.
Step 2. Reduce the amount figured
in Step 1 by any section 1250 ordinary
income recapture for the sale. This is
the amount from line 26g of the 2021

Other sales or dispositions of
section 1250 property. For each sale
of property held more than 1 year (for
which an entry wasn't made in Part I of
Form 4797), figure the smaller of (a) the
depreciation allowed or allowable, or (b)

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)

the total gain for the sale. This is the
smaller of line 22 or line 24 of Form
4797 (for 2021, or the comparable line
for the current tax year) for that
property. Next, reduce that amount by
any section 1250 ordinary income
recapture for the sale. This is the
amount from line 26g of Form 4797 (for
2021, or the comparable line for the
current tax year) for that property. The
result is the total unrecaptured section
1250 gain for the sale. Include this
amount on line 12.

28% Rate Gain or (Loss)
Complete the 28% Rate Gain
Worksheet if lines 10 and 11 of
Schedule D are both greater than zero
and the ANST reports in Part II, column
(f), either:
• A section 1202 gain on QSB stock, or
• A collectibles gain or (loss).
A collectibles gain or loss is any
long-term gain or deductible long-term
loss from the sale or exchange of a
collectible that is a capital asset.
Collectibles include works of art,
rugs, antiques, metals (such as gold,
silver, and platinum bullion), gems,
stamps, coins, alcoholic beverages, and
certain other tangible property.
Also, include gain (but not loss) from
the sale or exchange of an interest in a
partnership, S corporation, or trust held
for more than 1 year and attributable to
unrealized appreciation of collectibles.
For details, see Regulations section
1.1(h)-1. Also, attach the statement
required under Regulations section
1.1(h)-1(e).

Schedule K—Distributions
to Beneficiaries
Use this schedule to report the type and
amount of distributions that were made
to each beneficiary. A copy of this
schedule must be furnished to the
sponsoring ANC. The sponsoring ANC,
not the ANST, provides information to
the beneficiaries regarding distributions.
Distributions for each year are
considered to have been made in the
following order.
Tier I Distributions (Section 646(e)
(1))
These are distributions from the ANST
to the extent of the ANST's taxable
income, reduced by any income tax
paid by the ANST on that income, and
increased by any tax-exempt interest
income.

Tier I distributions are excluded from the
gross income of the beneficiary.
Tier II Distributions (Section 646(e)
(2))
These are distributions of amounts that
would have been Tier I distributions in
prior years (during which a section 646
election was in effect), but that have not,
in fact, been distributed in any prior
year.
Tier II distributions are excluded from
the gross income of the beneficiary.
Tier III Distributions (Section 646(e)
(3))
These are distributions considered to
have been made by the sponsoring
ANC with respect to its stock.

profits of the sponsoring ANC (after
adjustment for distributions made by the
sponsoring ANC during the year).
Section 643(e) applies for purposes of
determining the amount of a Tier III
distribution of property (other than
cash).
Tier IV Distributions (Section 646(e)
(4))
These are distributions of any amounts
that remain after applying the above
rules. They are considered as amounts
in excess of distributable net income for
the year.
Tier IV distributions are excluded from
the gross income of the beneficiary.

Tier III distributions are taxable to
beneficiaries as dividends, to the extent
of current or accumulated earnings and

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to
allow us to figure and collect the right amount of tax. You aren't required to provide the information requested on a form that is
subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents may become material in the administration of any Internal
Revenue law. The time needed to complete and file this form will vary depending on individual circumstances. The estimated
average time is:
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . . . . . . . . . . .
Preparing the form . . . . . . . . . . . . . . . . . . . . . . .
Copying, assembling, and sending the form to the IRS

. . . . . . . . .
. . . . . . . . .
. . . . . . . . .
. . . . . . . . .

32 hr., 30 min.
2 hr., 39 min.
4 hr., 12 min.
16 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we
would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can send your comments
to Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Don’t
send the tax form to this address. Instead, see Where To File, earlier.

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Instructions for Form 1041-N (Rev. 12-2021)